UNIDENTIFIED FEMALE: The Supreme Court now pronounces you man and man, wife and wife or man and wife.

UNIDENTIFIED MALE: DOMA is unconstitutional as a matter of equal protection.

UNIDENTIFIED FEMALE: An historic morning at the Supreme Court.

(END VIDEOTAPE)

LAWRENCE O`DONNELL, MSNBC ANCHOR: Joining the party now, the host of "Now," Alex Wagner and Krystal Ball, co-host of "the Cycle," Jonathan Kay of "the Washington Post" and Thomas Roberts, host of MSNBC live.

Let`s get right to the first award category, the best political move of the year.

Alex Wagner?

ALEX WAGNER, MSNBC ANCHOR, NOW WITH ALEX WAGNER SHOW: The best political move of the year I think was not one that was seen widely but was, I think, the most important. The two young women, 13-years-old and 15-years-old who were dreamers and came up to Speaker John Boehner in his morning dining routine while he was eating breakfast, one of whom father had been deported and said Speaker Boehner, when are you going to take up comprehensive immigration reform and he said I`m going to do it. They put him on the spot and forever more, they held John Boehner accountable on immigration reform.

O`DONNELL: Krystal Ball, best political move of the year?

KRYSTAL BALL, MSNBC HOST, THE CYCLE: You know, I`m a big fan of Harry Reid finally deciding that we needed to change the rules of the filibuster so that nominees could get through and actually be confirmed and maybe do the work of government as they are meant to do. He is someone who really came around on this issue. Originally in the president`s administration he was very much opposed to filibuster reform and there was just so much obstruction time and time again that he had to do something, and I think it was a great move.

O`DONNELL: Jonathan Capehart?

JONATHAN CAPEHART, OPINION WRITER, THE WASHINGTON POST: Can I cheat and do two?

O`DONNELL: Of course.

CAPEHART: Best political move, Democrats for standing firm with each other in the House and the Senate and behind the president when it came time to face down Republicans with regard to the shut down. For the first time Democrats were united. If you remember, two weeks before the shut down, there were stories in the "New York Times" about how Democrats are in disarray and don`t like what`s happening, but they stood firm.

BALL: That was also a lot of Harry Reid behind that strategy.

CAPEHART: Right. And the other best political move I would give to Bill De Blasio, who allowed his son to do the now famous Dante afro ad, which everyone point to as being one of the many turning points that took him from underdog to top of the heap.

O`DONNELL: Thomas Roberts?

THOMAS ROBERTS, HOST, MSNBC LIVE: I think -- and I`m not going to go with two.

CAPEHART: Thank you very much, Tom.

ROBERTS: But I think that the best political move was Chris Christie becoming the chair of the RGA. I think it sets him up logically for 2016 and on a national platform where he gets to travel to become more well-known, supporting the Republican brand and branding himself in the process.

O`DONNELL: That is a perfect move for Chris Christie. We have a tie breaker here because I`m going with Krystal Ball on this. I was with Harry Reid all the way. I was with Harry Reid when he was supposed to changing the Senate rules for the old -- for the old institutionalize reasons and I got on board with it. I don`t know, maybe, two weeks before they did it probably right around the same time as Harry Reid.

Next category, the worst political move of the year - Alex Wagner.

WAGNER: I sort of think this is a fluid ongoing move, which is listening to Ted Cruz. And anything that he says, I think, you know, the jury is still out on whether Ted Cruz will be the nominee in 2016. This man is only out for himself. Any Republican who thinks otherwise is kidding themselves. He will lead them off a cliff either fiscal or political if they listen to him.

O`DONNELL: The way he has led Mike Lee into disaster poll numbers in Utah.

BALL: Exactly.

O`DONNELL: Krystal?

BALL: Well, related to Ted Cruz, heritage action deciding to basically force the country into a shut down by scoring that vote and making a lot of Republicans vote to shut down the government. It was disastrous. I mean, they were already wanting to sort of follow Ted Cruz off the cliff and heritage action just like pushed them right over the last little bit.

O`DONNELL: And Jonathan Capehart, your two worst political moves?

CAPEHART: Because I actually do have two.

O`DONNELL: No, it`s all right. Come on.

CAPEHART: OK, worst political move, the staff of the president allowing him to go out there time and time again saying you can -- if you like your insurance you can keep it and then also allowing him to go out there and talk about how, you know, healthcare.gov, go here you will be able to get insurance and everything will be fine. Terrible for the president.

The second one is the Republican party. They put out an autopsy in March that said, unequivocally, you must do better with women, African-Americans, gays and lesbians, the youth. And what has the Republican party done since then? Told women, African-Americans, Latinos, youth, gays and lesbians, to go (bleep) yourself.

O`DONNELL: Thomas Roberts, worse political move for the year?

ROBERTS: Can I get back on one piece because he`s cheating.

O`DONNELL: Yes.

CAPEHART: That`s my answer.

O`DONNELL: Is anyone surprised who is cheating at the table?

ROBERTS: The RNC autopsy coming out in March. It provided nothing of substance except for what the left has been saying all along. Very wise man to my right wrote autopsies are only done on dead things in reference to the Republican national party. And they have done nothing in terms of setting themselves up for failure since then. Because they`re against immigration reform or marriage equality or anything to do with a woman`s right to choose. Although they say they need to have the wide sweeping approach to get people back in. They have done nothing to show that effort. So, it has been a lot of words, not a lot of effort.

O`DONNELL: And in terms of, you know, worst political move involving Republicans, government shut down. I mean, you know, Ann Coulter alone in the universe says it was a beautiful thing.

WAGNER: She is alone where no one could hear her speak.

O`DONNELL: Look what the government shut down cost in terms of polling. I mean, that to me is the ultimate Republican bad move of the year. But it is not my choice. My choice for worst political move of the year is a physical move and we`re going to need a video assist for -- you guys picked this up on your monitors here. We`re going to show you the worst political move of the year. It occurred in Toronto.

CAPEHART: Yes, I knew it.

(VIDEO CLIP PLAYING)

O`DONNELL: And let`s get -- you`re going to see this video. Stop. Look. That`s the move. Ok, that`s the worst move right there. Because as soon as he made the decision to make that move, look what was going to happen next.

Oh. That`s a bad political move. That is a very bad move.

UNIDENTIFIED FEMALE: Bad move in general.

UNIDENTIFIED MALE: He is very agile.

O`DONNELL: And look, he just goes back to where he was coming from.

CAPEHART: Hey, don`t fall down.

WAGNER: The slow-mo, freeze frame really drives home the movement.

BALL: When there was a point of an overturn.

O`DONNELL: I think It is just a beautiful moment where you can see that decision being made, you know. And then the commitment to it where he keeps going in that direction. He knocks her down and realizes what am I doing over here anyway? I go back.

(CROSSTALK)

ROBERTS: The shortest distance between two points is a straight line. He should have bee-lined straight over the desks that he was trying to get to his brother. I think he said his brother was in an altercation, he was trying to get to his brother. Anyway.

O`DONNELL: We could use Rob Ford video for almost every category tonight. But, we probably won`t.

Coming up, our guests will predict the rising star of 2014 and we will crown the biggest winner and biggest loser of 2013 coming up. That is coming up.

(COMMERCIAL BREAK)

O`DONNELL: And now, we are moving to the rising star of 2014.

Alex Wagner, rising star of 2014?

WAGNER: Everybody`s going to say Wendy Davis and I apologize to everybody.

CAPEHART: Not everyone.

WAGNER: OK. Some people may and I think she is a rising star, but in through Capehart`s action, I`m going to hedge my bets and also say Hassan Rouhani of Iran. Because I think we are going to be hearing a lot more from him in 2014 and he could change the geopolitical balance as we know him.

O`DONNELL: Good choice.

BALL: Well, now you have made my pick seem predictable because I did pick Wendy Davis.

O`DONNELL: We might be able to get a table consensus on Wendy Davis. But go ahead, let`s hear it.

BALL: Well, I mean, obviously, she launched her career with a filibuster and is running for governor. Even if she doesn`t win for governor, which, let`s be honest, is a pretty uphill battle that you never know things happen, even if she doesn`t win that office, I think big things are in her future. And I think the party has big plans for her. And she is a spectacular talent. So, it will be great to see if she can help nudge Texas in a bluer direction more rapidly.

O`DONNELL: Jonathan Capehart?

CAPEHART: I only have one answer.

(CROSSTALK)

O`DONNELL: Capehart needs more champagne. He has got only one answer for this. OK, go ahead.

CAPEHART: And my answer is Bill de Blasio. Here is a person who ran on a very progressive agenda, talked about inequality in New York City, tale of two cities. He got elected. And now the spotlight will be on him to see whether he can turn that progressive campaign and those progressive ideas into a progressive government that succeeds in the minds of New Yorkers.

ROBERTS: (INAUDIBLE), what do you think of that?

CAPEHART: Look, I think that this is --

O`DONNELL: There you go. Fuel him up for the next round.

CAPEHART: It says a lot. Trying to make sure that the establishment of New York doesn`t freak out.

WAGNER: It was a savvy move.

CAPEHART: Very savvy move, very political move and actually very smart move. There are not many people in the country who could run the New York City police department.

O`DONNELL: Thomas Roberts, rising political star or star of any kind of 2014, yourself excluded.

ROBERTS: Alex got me by saying we couldn`t talk about Wendy Davis.

WAGNER: I know.

ROBERTS: I did.

WAGNER: I`m kicked off.

ROBERTS: It`s not because she has great hair or a great fashion sense in sneakers. I think that she is a tremendous talent and can help, as Krystal is saying, maybe push Texas to be a little bluer. But I think she is certainly one to watch as a bright future ahead of her.

O`DONNELL: I think Wendy Davis certainly was on or is on all of our lists for rising star. But I am going with Bill de Blasio.

(CROSSTALK)

O`DONNELL: The mayor of New York, a new mayor of New York is always a rising star. I mean, as a big as medium market, you know, in the country and they get a tremendous amount of attention. Dante de Blasio rising co-star, a known son for sure.

CAPEHART: And the Aftro is the third star.

O`DONNELL: He is fun to watch and already surprised us with his police commissioner choice and there will be more.

Up next, the best and worst political theater of 2013 and there will be video assists on this one, I promise you. There will be, absolutely.

(COMMERCIAL BREAK)

O`DONNELL: Welcome back to the "Last Word" holiday show.

We are now moving on to the category of best political theater. But before we do, I just want to -- Thomas Roberts is actually now in his third wardrobe change. What I missed, Thomas, is when you went from blue to green for the second segment. But the red, no one is going to miss that.

(CROSSTALK)

ROBERTS: Thank you very much.

CAPEHART: He has had more costume changes than Diana Ross at the super bowl.

ROBERTS: I did get to wear this one in Russian. I had this made in Russia.

O`DONNELL: It`s beautiful thing.

O`DONNELL: It`s a beautiful thing. So the category is -- yes, best political theater of 2013, Alex Wagner.

WAGNER: Thomas` tee, these are beautiful for me because, Lawrence, you are a showbiz guy. Theater involves costumes. And the best form of theater that I have seen on the political stage in 2013 was Rick Perry dressing as Jonathan Franzen dressing as a beatnik.

(LAUGHTER)

WAGNER: That man -- no one -- I mean Rick Perry is just operating with a different set of understanding and values about what you can get by the American people. And apparently like Clark Kent, he thinks that just that pair of glasses is enough to convince America that he`s actually smart.

O`DONNELL: What do you think he is doing?

BALL: Well, that is awkward.

O`DONNELL: When I feel I need to look smart --

WAGNER: It`s different now.

O`DONNELL: I whip out the glasses. That`s what they`re for. It is the whole idea.

Krystal Ball, the best political theater of 2013?

BALL: Well, Alex Wagner may not like it but I am also choosing Wendy Davis for this.

WAGNER: I like Wendy Davis.

BALL: What do you have against Wendy Davis? That`s what I don`t understand.

Her filibuster -- I mean, it launched her career. It made her a national star. And it wasn`t about her, it was about blocking a truly awful egregious bill that is going to -- that is already hurting women in Texas. So people rallied around her across the country. Hundreds of thousands of You Tube views watching the streaming video of a filibuster on the floor of the Texas. I mean, you know, it`s just incredible.

O`DONNELL: It was great.

Jonathan Capehart?

CAPEHART: I`m changing my mind.

O`DONNELL: Really?

CAPEHART: Yes. I`m changing my mind.

O`DONNELL: This is like the Supreme Court. You just heard one of the other justices me a case and you`re swayed by an argument?

ROBERTS: He changes his mind more than I change my jackets.

CAPEHART: I`m not swayed by an argument. I was going to say Wendy Davis. But I have changed my mind because of all the --

ROBERTS: Just to be different.

CAPEHART: No, because it is talk about theater and theater is about make believe and who is all about make believe? Senator Ted Cruz. And you talk about someone who did a real filibuster, he did a faux filibuster on the floor of the Senate, yammering on about whatever it was, I can`t even remember.

BALL: Green eggs and ham.

CAPEHART: Green eggs and ham and Hitler and Chamberlain and a whole bunch of other things, but it enhance his stature within the party looking like he was fighting for, you know, the regular person when what he was really doing was giving the best performance of his life on behalf of himself.

BALL: He was actually lying to his face. He was really doing.

CAPEHART: Yes.

O`DONNELL: Thomas?

ROBERTS: For me, it was watching Bob McDonald through the year.

O`DONNELL: What a collapse.

ROBERTS: Not knowing where the watch came from or not know where money for his daughter`s wedding reception came from or the fancy clothes on his wife`s back.

O`DONNELL: It was kind of an amazing TV series just watching him just collapse from big star, next Republican presidential nominee possibly to -- is he, does he maybe need a criminal lawyer here?

ROBERTS: But all year long we have been seeing this unravel from March until now. And now, it makes people think OK, so where is this money going to because to our elected officials? What is the law in Virginia and other states that allows this to be acceptable in some way, shape or form?

BALL: Non-existent. And he`s still pretty popular there, shockingly and nationally he`s done. But in Virginia he is pretty popular.

O`DONNELL: My choice is going to involve a little video exhibition. And it`s when James Lipton brought Tina Fey back to her glory days as Sarah Palin.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Same sex marriage, what is your view on that?

UNIDENTIFIED FEMALE: The bible says it`s gross.

UNIDENTIFIED MALE: How does a woman like you make her way through a man`s world?

UNIDENTIFIED FEMALE: I don`t think of it as a man`s world or a woman`s world unless again we`re talking about marriage. But I think of it as people being mavericks or not being mavericks.

(END VIDEO CLIP)

O`DONNELL: You know, I talked to James. He said no rehearsal. She didn`t know. Guests don`t know what`s coming with him, ever. I mean, she was just amazing.

WAGNER: If only she could replace the actual Sarah Palin.

O`DONNELL: She just lit that up.

All right, worst political theater of the year, Alex Wagner?

WAGNER: (INAUDIBLE) press conference to in that cardigan set, I will never ever forget the pained look on her face. And, of course, the tragedy and unwinding that followed. It was an attempt at solidarity that just disintegrated before our very eyes.

O`DONNELL: Krystal Ball.

BALL: I mean, I do want to be clear. There is nothing wrong with a good cardigan set. The rest of that I agree with that.

O`DONNELL: I think they got that.

WAGNER: Love cardigans and Wendy Davis.

BALL: Yes, indeed.

I have to disagree with my friend, Jonathan Capehart. Because I think the worst political theater of the year was with Ted Cruz foe faux filibuster. It wasn`t even a real filibuster. He was throwing his own colleagues and his owned base under the bus, forcing a government shutdown. It is absurd. It was ridiculous. It was disaster. It was terrible.

O`DONNELL: Jonathan Capehart, the worst political theater?

CAPEHART: The worst political theater is those nasty protests over the closures of the war memorials during the shutdown which allowed Larry Claman to call on the president to put down the Koran and come out with his hands out -- I mean, up that allowed a young man to un-hurl the confederate flag in front of the White House, the home of a black family? That, to me, was the worst political theater I was going to say ever, but that is hyperbolic.

(CROSSTALK)

O`DONNELL: Tomorrow night we`re going to do the ever show.

Thomas Roberts, worst political theater to you.

ROBERTS: I have to say as well, the Ted Cruz incident and what it did to the government. But not only that, what it brought out in people and where I think the confederate flag showing up, that is not so much theater as it is tapping into hatred that exists in this country. The theater is what a Ted Cruz does or what the Kentucky senators did when they have their mic, and Rand Paul comes up to Mitch McConnell, hey, we got to talk about this for CNN. Hold on, is this on, and then it is on the whole time and we catch them talking to each other and they`re like this is -- they don`t know what they`re talking about. I`m going to say this and I`m going to do that.

It is like come on guys, this isn`t your first time at the rodeo and you shouldn`t be doing this to our country and let alone it isn`t your first time at the rodeo with a hot mic.

CAPEHART: And I thought those two didn`t like each other.

O`DONNELL: There was so much political theater for this category this year with the Cruz filibuster, with the Rand Paul filibuster, with pathetic Mike Lee in the Ted Cruz, it was a hard one.

WAGNER: He`s known colloquially as pathetic Mike.

(LAUGHTER)

O`DONNELL: In that crazy filibuster.

But it was a very hard list to get down to one and I ended up choosing something from Sunday morning TV, which I think is the magic moment of the year from -- there`s a video assist coming. Sunday morning TV moment, best political theater of the year. Here it is.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE REPORTER: When you said you love Kim and think he`s awesome, but you will watch him destroy the United States with his record on human rights?

UNIDENTIFIED MALE: I didn`t look at all of that. Understand what he`s doing? I don`t condone it. I hate the fact that he`s doing it. But that`s a human being that his guard down to me than a friend. I didn`t talk about that.

(END VIDEO CLIP)

(CROSSTALK)

O`DONNELL: Anybody want to switch their vote?

WAGNER: Obviously.

O`DONNELL: But you know, he doesn`t condone that. He doesn`t condone that. He doesn`t.

ROBERTS: You don`t need to go through a metal detector to apply privately.

O`DONNELL: All right, we`re going to break it. We are going to come back with the next category, the people that we are sorry to see go. That`s next.

(COMMERCIAL BREAK)

O`DONNELL: Welcome back for the last word holiday party.

Our next category, sorry to see you go. Alex Wagner, 2013, who are you sorry to see go?

WAGNER: In a runaway unanimous vote with myself, Michele Bachmann. No person was a better mouth piece for the flagellant and fallacies of the right wing, the Michele Bachmann. And I almost said some of the worst political theater was Michelle Bachmann in Cairo which in of itself has created accusing the Muslim brotherhood of being behind 9/11. Those are the kinds of things we can no longer look forward to.

O`DONNELL: Krystal Ball, so hard to see you go?

BALL: Well, in a similar vein, but as native Virginian, I have to go with Ken Cuccinelli who is electorate political career has now ended and we can no longer get to heard his thoughts on sodomy and things of that sort. So, it is a little sad. It is a bit of a sad time for me.

O`DONNELL: Jonathan Capehart?

CAPEHART: It is a difficult time with this one. But I settled on Congressman Tray Radel who we, you know, who voted to drug test welfare recipients. But then it was found out to be cocaine. So, he is in rehab and I hope he gets well.

O`DONNELL: He is really coming back?

CAPEHART: But his colleagues want him to beat it.

BALL: Second chances.

O`DONNELL: Thomas Roberts, who are you sorry to see go?

ROBERTS: Carlos Danger.

(CROSSTALK)

O`DONNELL: We`re just going to have to assume.

ROBERTS: Yes.

O`DONNELL: Understand he is gone. You take Carlos`s word for it?

WAGNER: Yes, exactly. He`s a trust worthy guy.

O`DONNELL: OK.

Well, sorry to see you go there --

ROBERTS: He`s going to come back as Monte lightning rod.

O`DONNELL: You`re just going to let that one go.

ROBERTS: I`m drinking water, too. I`m drinking water too.

O`DONNELL: I need some air time between that and mine because you will see why.

Sorry to see you go, I`m taking the category more seriously and of course Nelson Mandela, which I think we can all unanimously agree on, that was a great, great loss. The indispensable man. The world would have been so different, our history so different without him. It is unimaginable. I believe he is the indispensable man of the 20th century. We could have replaced a lot of other people but not him.

And I don`t want to leave the sorry to see you go category without mentioning James Gandolphini which was a shocking tragedy. He brought so much life to the screen. Arguably one of the greatest acting portrayals absolutely in the history of television, no question about it. And I think people all kind of felt they knew him somehow. He was one of those guys. I know a guy like him. You know, there was real accessibility there.

All right, we`re going to break it there. When we come back, the biggest surprise of 2013. You will be surprised by our choice of surprises. You will. It will be great. Huge surprise. Very surprising.

(COMMERCIAL BREAK)

O`DONNELL: Joining the party here at the "Last Word" holiday award show, Joy Reid, managing editor of the Grio, Richard Wolffe, executive editor of MSNBC.com, Nia-Malika Henderson of the "Washington Post" and Josh Barro of Business Insider.

Our next category, Joy Reid, biggest surprise of 2013?

JOY REID, MANAGING EDITOR, THE GRIO/MSNBC CONTRIBUTOR: Well, you know what? I decided to try to go bipartisan on this one because who among us has not wanted to compliment Newt Gingrich at some point.

(LAUGHTER)

REID: OK. All right, maybe none of us have ever wanted to. But you know what? I figured, listen, when Newt Gingrich and Ted Cruz both posted sort of warm things of Nelson Mandela, which is kind of a standard thing you do. There is nothing particularly courageous about that because he was a great man. Everybody agree.

The backlash against him and against Ted Cruz was tremendous. I mean, people on the right went after them as sell-outs to conservatism. They went after Mandela in death as a terrorist and communist. And the normal response of people on the right when the base goes after this is to shrink away and apologize.

But Newt Gingrich actually did something that I found surprising and pleasantly so. He actually came back at those critics and he explained to them why he supported even when he was a young congressman, anti-apartheid measures by the U.S. government. And he really went want at them, I think in a full sort of -- we actually have a clip.

O`DONNELL: Good, let`s use that.

(BEGIN VIDEO CLIP)

CANDY CROWLEY, CNN CHIEF POLITICAL CORRESPONDENT: What do you make of this backlash?

NEWT GINGRICH, CNN HOST, CROSSFIRE: I was very surprised by it. Two points that makes people want Mandela personally are first of all, this very long deep commitment to freedom which I think most of us could identify with.

And second that after 27 years in prison, he doesn`t come out bitter. He doesn`t come out angry. He comes out as an extraordinarily wise man who actually invites his prison guard to sit in the front row at his inauguration as president.

RICHARD WOLFFE, EXECUTIVE EDITOR, MSNBC.COM: Well, I`m tense as I pull back to count on this one and say actually it`s the way Thomas Roberts stole my tuxedo tonight.

O`DONNELL: Three. Three tuxedos. Thomas Roberts, all of the three.

WOLFFE: But actually, the biggest surprise, to be honest, is the way healthcare.gov-- botch -- how predictable was it that it was the biggest piece of the second term for this president. But also, how quickly they fixed it. And having launched a much smaller site although still challenging, I can tell you the fixing it is just as hard as creating it in the first place. An incredible surprise that they turned it around so quickly. Obviously, also, how could they screw it up in the first place.

O`DONNELL: It was amazing.

Nia, your biggest surprise of the year?

NIA-MALIKA HENDERSON, POLITICAL REPORTER, THE WASHINGTON POST: Biggest surprise is immigration reform didn`t even get a vote in the house and, of course, passed the Senate, I thought we would have gotten further.

O`DONNELL: How could you fall for that? Just because they said they were going to do it.

HENDERSON: There was all this conversation even on, you know, on conservative radio. You had on FOX News folks saying finally, maybe we should give this immigration reform a try looking at the returns and results of the 2012 campaign, nothing hand at least on the house side. We have to see what happens in 2014, whether or not they are going to get something done. Obama is fine with saying maybe not a big bill but some sort of a piecemeal bill and that is what is Boehner need to -- want to do as well.

O`DONNELL: Josh, your biggest surprise of the year?

JOSH BARRO, BUSINESS INSIDER: Arizona Governor Jan Brewer most known nationally for aggressive anti-immigrant stance as one of the biggest champions of the Medicaid expansion in Obamacare. There has been intense pressure on Republican state officials to resist Obamacare in every turn. And she looked at it and said, you know, I want to take this. It`s the right thing fiscally and the right thing for people in our state. And she had to fight very hard against a legislature led by her own party. She said I`m going to veto any budget you send me that doesn`t expand Medicaid, then she said, I`m going to veto every billion send me until you expand Medicaid and she did that. And then, at the last minute, she cobbled together this coalition of democrats and Republicans who are aligned with various business and medical interest and they passed it. And you know, her Republicans in legislature called her a traitor but she gave this very sort of calm press conference afterwards where she was basically saying, you know, this is what we needed to do and we will come back tomorrow and we will govern the state more.

O`DONNELL: It was amazing especially the ferocity with which she went at this thing once she decided we got to do this.

BARRO: Right. She is a really underrated political talent actually.

O`DONNELL: I wonder why. Does she ever do anything? All right, here is my biggest surprise of the year.

My biggest surprise of the year when the so-called IRS scandal broke. I said, OK, let me take and look at world. Let me read the actual statute. And so, we get it. It`s 100 years old. This law is written hundred years ago and it says that civil leagues or organizes, 501 c-4s, not organized for profit, but must be not organized for profit but operated exclusively for the promotion of social welfare. And I say well, how can I possibly be doing any of this and we find in 1959 when the law was in middle age, when it was 48 years old. The council at the IRS wrote a regulation that basically changed the word exclusively to primarily.

And so they have been running this thing under the regulation, not under the law. And every bit of the political fund raising activity that goes on is actually illegal according to the law. And I have never seen a regulation written directly opposite the intent of the law. I could drone on and on with this.

But, Nia, have another sip. We are going to take a break here. When we come back after the break with our picks for person of the year.

(COMMERCIAL BREAK)

O`DONNELL: Welcome back to "the Last Word" holiday party and year end award show.

And the big category has arrived. The big category, you guys get to decide the person of the year.

Joy Reid, your person of the year?

REID: OK. So my pick could not be more unoriginal but as a lap catholic since 6-years-old, I had to pick cardinal -- I love the Pope. He is the best pope ever.

O`DONNELL: You don`t care the time got there first?

REID: Well, they copied me.

Imitation is the sincerest form of flattery. So time, thank you for copying my ideas. You know, I mean, I think the Pope has done a great service to the country. And that he has provided the most authentic moral voice on the issue of inequality that has put the conservative movement, I believe, back on their heels and forced them to have to attack the Pope in order to defend his idea of maximum greed and maximum capitalism. And I think he`s a clear voice on it and it`s what the church should be about. That`s what Jesus was for. It`s about the poor and about caring for them over riches.

O`DONNELL: You know what? Let`s just change this to Pope of the year.

(LAUGHTER)

O`DONNELL: All right, Richard Wolffe, person of the year?

WOLFFE: So, I was tempted to do Harry Reid. But honestly, I couldn`t be bothered to finish the sentence. And so, I`m actually going to go outside the world of politics.

O`DONNELL: He would have been so great.

WOLFFE: He would have been first time ever.

No, really, because when the NRA says the only thing that can stop a bad guy with a gun is a good guy with a gun, this woman single handedly, not only saved lives but changed the course of that ridiculous debate to showed that the thing that stops a bad guy with a gun is a country with a heart and she has a heart.

O`DONNELL: Now, Nia, your person of the year?

HENDERSON: I have the same one.

O`DONNELL: Remind us of the situation.

HENDERSON: Well, this is Antoinette (INAUDIBLE). She is a bookkeeper at a (INAUDIBLE) high school. It`s a suburban school outside of Atlanta. A guy comes in, Michael Brandon Hill. He is intending to shoot up the school and she talks to him for minutes on end. She`s on the phone with the dispatcher.

O`DONNELL: You know what? The control room quit moving. They tell me they have some of it right now. Let`s listen to Antoinette (INAUDIBLE).

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: It`s going to be all right. I just want you to know that I love you though, OK? And I`m proud of you. That is a good that you just given up and don`t worry about it. We all go through something in life. All right? OK. Guess what Michael? My last name is Hill too. You know, my mom was a Hill.

(END VIDEO CLIP)

O`DONNELL: It was amazing. We`re never going to forget that.

HENDERSON: It was amazing. I mean, she talked to him about her own story. She had tried to commit suicide the year before. She had a terrible divorce. And she has a son who she deals with --

O`DONNELL: She`s standing there, right, on she is on the phone to 911 and they are hearing her talking to him. We don`t hear him very much.

HENDERSON: Right. We don`t hear him but we just hear her essentially testifying and ministering to him about her issues. He is off his medication and she completely calms him down and calms the dispatcher down and does an amazing thing. I watched it. I listen to the tapes when I was at the office at the Post and I was crying and wanted to share it with everybody there. It was really amazing.

O`DONNELL: Yes. Josh, your person of the year?

BARRO: Well, I`m going to do with the Time editor sometimes do, give it to a group of three people.

(CROSSTALK)

O`DONNELL: Turn off his microphone.

BARRO: We have gone through three years of basically not knowing is the government going to be open or closed tomorrow? We don`t really have economic policy and three people are bringing us back to a position of normalcy. It is Patty Murray and Paul Ryan who did what looked impossible and actually struck a budget deal that looks like it will take us through almost two years of non-crisis budget making in Washington which is amazing.

And Janet Yellen, the first woman to run the federal Reserve who was an architect of fed policies that have basically stepped in for a Congress that couldn`t do anything over the last few years in a prompt up the economy. She will brings stability in that part of economic policymaking. Some people in Congress are finally bringing stability in their own part of policy making. And I`m hopeful this means in 2014, we are actually going to see some better economic growth and people will get back in to work and America will get moving again.

O`DONNELL: Well, my choice deserved to be man of the year for many, many, many years of his life and he has been at different times. But I`m going back to Nelson Mandela. This is the last year of his life and the last time he can be mentioned here. I think his influence in his country and around the world is incalculable and invaluable. And I hope -- everyone says we will never see his like again, yes, that`s possibility. But this is the kind of miracle I want to hope for that there will be another Nelson Mandela.

All right, we are going to break. Coming up, we will have our biggest winner, biggest losers of the year. We are not done. There`s more party, more booze, and two more categories.

(COMMERCIAL BREAK)

O`DONNELL: And we`re back with the "Last Word" holiday party and the year-end award show.

And in the final two categories, biggest loser of 2013? Joy Reid, who was it?

REID: There was so many to choose from. It was really hard and they were down just one loser. It seems like everyone is losing the fear, losing hard. But I want Marco Rubio.

O`DONNELL: OK.

REID: Because never have I seen somebody --

O`DONNELL: He doesn`t know that. He doesn`t know his --

REID: No. He is still out there trying to be relevant. But never have I seen a more spectacular political implosion. This guy went from being the savior of the Republican Party. He was supposed to be the Cuban Ronald Reagan. He was supposed to revolutionize Republican politics. And by making conservatives embrace immigration reform. He ended u running away from his own policy that he had not really help right, but that he was the face of.

He walked from immigration reform and now sort of the desperately trying to clean to budget issues to become relevant because Paul Ryan is running He ran away with it. Ted Cruz is not the premier Cuban American and on his frantic he`s politician and he sort of on the sidelines.

O`DONNELL: And that grab for the water?

REID: And the water grab.

O`DONNELL: That didn`t help.

REID: I think in a bad way.

O`DONNELL: Go ahead. Rich Wolffe, biggest loser of the year?

WOLFFE: I`m tempted to say these were the biggest losers because this is the Obamacare haters, you know. They really though they had that moment. The health care site was just ready to fail completely. This was last chance where they can stop this train wreck and they got it fixed. And then people started to get better health care. And all of those individual stories that they grabbed on to and said look, someone didn`t get health care, it turned out to be untrue.

I am afraid they are like those (INAUDIBLE) people fighting the second world war on a lost island somewhere in the pacific. They will still be there but health care would have moved on?

O`DONNELL: Nia-Malika Henderson, biggest loser?

HENDERSON: I have got to say the Republican party. The establishment wing. I mean, they came into this year, obviously looking back 2012, they wanted to rebrand, they had a big roll out of rebranding efforts. It didn`t really work in the very active and powerful branch, the tea party branch, the more conservative. But people like Ted Cruz very much had a more boisterous and in some ways the more successful year in terms of wrestling the identity of the Republican party from the Republican party establishment. And now, next year, you are going to see all of these challengers, primary challengers to Republican party establishment figures like John Cornyn, like Lindsey Graham in South Carolina. So, it`s going to be an interesting year. I think they didn`t do themselves and they are going to do public party bashers.

O`DONNELL: Josh Barro, biggest loser.

BARRO: Well, I think we missed the obvious one, which is Canada.

O`DONNELL: Yes, we did.

BARRO: I mean, the thing Canada always has going for is it suppose to be, you know, classier and more put together than the United States. They are all like look, everybody up here has health care. We didn`t have a recession. If we had nuclear weapons, we wouldn`t think about whether put Sarah Palin in charge of them.

But then Rob Ford came down from the north to make us feel better about ourselves here in the United States.

O`DONNELL: He did.

BARRO: Good for us, bad for Canada.

REID: But who attacks Canada?

BARRO: Well, Rob Ford apparently.

HENDERSON: Yes.

O`DONNELL: My biggest loser is a big thing here. It`s American democracy. First of all, you have got the United States Senate, fundamentally anti-democratic institution represents land not people, two per state. And then this attack on voting rights that is relentless, that is non-stop, the Supreme Court doing their bit on the voting rights act itself. This was a bad year for democracy in this country. There is plenty of things we can do to try to fight back and we will.

On to final category, biggest winner of 2013 -- Joy Reid.

REID: Yes. I went with the Kentucky governor, Steve Beshear. He has become sort of the hero of the Democratic Party because he got health care right, he got the roll out well. Kentucky is doing very well in terms of rolling out the plan. And he is ruling over divided government so he manage to actually get bipartisan agreement to implement both the Medicaid expansion as well as the state exchanges which are actually doing very well, Connect, the Kentucky health care version of the ACA, is the most successful one outside of California in the country. Democrats are looking to him for way that you can politically win from health care. But see how to get the policy right.

O`DONNELL: Biggest winner?

WOLFFE: So, I was going to be all sincere and talk about the families that got health care and they didn`t before. But actually in the spirit of this plastic glass, right, I want to stay entirely political and stay Hillary Clinton. This world has been so dysfunctional this year. She may well go on to higher peaks in terms of next year and 16 and everything else, but right now, being off stage, having done what she has done, people are yearning for a return to when politics at least look competent. Hillary Clinton.

O`DONNELL: Nia, biggest winner.

HENDERSON: I`m going to go a little bit outside of politics but stay in this building. Kate McKenna (ph) whom is a "Saturday Night Live" player who, in some ways, I think the future of "Saturday Night live," she is the one who played Kathleen Sibelius in that hilarious skit. She has played (INAUDIBLE). She is probably play going to play Hillary Clinton. So Hillary Clinton, beware of that because "Saturday Night Live" has this specific place in the culture. It very much solidifies especially when it comes to politicians, solidifies a sort of the image that politicians have. You saw that Tina Fey played Sarah Palin so magnificently. Will Ferrell played Bush in the same way. He really face strategory (ph) or was it Bush?

So, I think Kate McKenna (ph) is fantastic. She`s got such a great future in this rebuilding year of SNL. She is very much a part of the forefront.

O`DONNELL: Josh Barro, your biggest winner. And we`re going to roll -- by the way, we are going to roll the names of some winners. We`re going to roll the credits of the people who work on this show and actually make it happen. Because a lot of people think I do it by myself and it`s not true. I`m going to prove it to you by rolling credits.

Josh Barro, biggest winner?

BARRO: Chris Christie. And he is just doing something politically so opposite from what the rest of the party is doing right now. Republicans are running towards their base, alienating more of the political center and losing elections. And even when they win, they think their strategies to get to 51, 52 percent of the vote. Chris Christie won with more than 60 percent of the vote, found a way to attract independent voters, a large chunk of Democrats. He won Hispanic voters against a Democratic opponent. It`s a blueprint for the rest of the party that can make Republicans come back in 2016 if they`re willing to listen to him about how to do it.

O`DONNELL: My biggest winner, the cub scout pack at the sixth avenue Baptist church in Birmingham, Alabama, 14 cub scouts gave me this check for the K.I.N.D. fund, Kids in Need of Desk, $18, 067.75. Amazing work. They worked all year at it.

And thank you everybody for all the work you did this year making this show easy for me to do.

Coming on being wicked smart about everything. I need that.

Thank you very much. Happy New Year.

UNIDENTIFIED FEMALE: Happy new year!

UNIDENTIFIED MALE: Cheers.

UNIDENTIFIED FEMALE: Happy new year.

END

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